BoCom predicts China's 2014 GDP growth at 7.5%

(Xinhua) Updated: 2014-07-03 16:17

BEIJING - China's annual economic growth is likely to stand at 7.5 percent in 2014 thanks to government measures, meeting the official target set at the beginning of the year, said a report published by a research center under the Bank of Communications.

Lian Ping, chief economist of the center, said on Thursday that China's economy is stabilizing after leading indicators showed positive signs in factory activity and foreign trade.

Latest manufacturing purchasing managers' index readings released by government authorities and HSBC respectively indicated that China's manufacturing expanded in June after months of lackluster performance. Exports also picked up in May with a 7-percent year-on-year increase, reversing a weak first quarter.

Lian expects GDP (gross domestic product) will grow by 7.5 percent in the second quarter, marking a mild recovery from the January-March period when the expansion pace slowed to the lowest point since the third quarter of 2012.

Official GDP growth in the second quarter will be released by the National Bureau of Statistics on July 17, along with a series of other data including industrial output, investment and retail sales.

According to the center's report, the central government has carried out a string of measures to fuel economic growth, including programs to boost infrastructure and affordable housing, financial support to export-oriented sectors, tax breaks for small businesses and targeted monetary easing to stimulate the real economy.

As those favorable policies are likely to maintain in the second half, their effects will continue.

The economy will gather more steam in the third quarter with quarterly growth hitting 2.2 percent, Lian said, adding the year-on-year pace may slow to 7.4 percent due to a high base in 2013.

With ever-narrowing fluctuation in the quarterly growth rate, China's economic advance is more stable, entering a stage of "new norm of growth", which, President Xi Jinping said, China should adapt to and tap new opportunities in.

Lian said the "new norm of growth" features medium-to-high expansion pace, low inflation, milder quarterly GDP change, low partial risks and continuous policies on structural adjustment.

The center forecast that China's Consumer Price Index growth will run at a low level of 2.2 percent year on year for 2014, Producer Price Index expansion at negative 1.5 percent, industrial output growth at 9.2 percent, exports growing 6.5 percent and imports at 6 percent.

Lian said the central government will continue to adopt a prudent monetary policy with targeted easing to support key and weak links of the economy such as small firms and agriculture.

Efforts in infrastructure including railway and affordable housing will be boosted to offset a cooling property sector, Lian added.

Meanwhile, he warned of risks of "deflation" in the manufacturing sector and bond default and called for attention to prevent the two separate potential risks from causing a combined blow to the economy.